Ongoye Proprietary Limited $($Ongoye$)$ is a chocolate manufacturing company based in East London. Ongoye is a registered VAT vendor and has a $31$ December year end$\mathrm{.}1)$ Ongoye purchased a brand new item of plant on $1$ January $2012$ for R$5000000($VAT exclusive$).$ The plant is measured using the revaluation model. Revaluations are performed every two years. Revaluations are accounted for using the net replacement value method.The fair value of the plant was established through an independent appraisal from BMC Revaluers. The VAT exclusive fair value of the plant with respect to the two periods of revaluation is provided below:Date of revaluation Fair value$1$ January $2014$ R$45000001$ January $2016$ R$27600002)$ During the $2016$ financial year it has been noted that a truck acquired on $1$ April $2015$ had been incorrectly debited to the maintenance expenses account. The motor vehicle was acquired for R$912000($VAT inclusive$).$ The VAT was accounted for correctly on this date $($input VAT was claimed and recorded correctly$).$ This error is considered material Additional information:

Plant Trucks

Depreciation

policy

Straight line over $10$ years to

a nil residual value.

$25\%$ per annum

diminishing balance to

a nil residual value.

Capital and wear

and tear

allowances

S$12$C $(40\%$ in the first year

and $20\%$ in each successive

year$).$ Not apportioned for

time.

S$11($e$)$ write off period

of $4$ years, apportioned

for time.

$$ It is Ongoye$$s intention to keep the plant for production purposes.

$$ Ongoye realises the revaluation surplus into retained earnings at the earlier of

retirement or disposal.

$$ The tax authorities have indicated that relevant tax assessments will be

reopened if required.

$$ There were no additions nor disposals made during the current financial year

for any property, plant and equipment.

$$ The tax rates have remained unchanged for all the periods under review as

follows:

$-$ Normal tax is at $27\%$

$-$ VAT at $15\%$

$-$ Capital gains inclusion rate at $80\%$

REQUIRED MARKS

$1.$ Prepare the journal entries $($including the tax journals$)$ to account

for the above information in the financial statements of Ongoye

Proprietary Limited for the year ended $31$ December $2016.($Show

all workings$)$

$23$

$2.$ Prepare the following notes as they would be disclosed in the

financial statements of Ongoye Proprietary Limited for the year

ended $31$ December $2016.$